Question

The Federal Reserve Board, under the direction of Janet Yellen, is keeping interest rates at amazingly low levels. What are the benefits and consequences of taking on such action? Include in your answer issues as interest rate stimulus, inflation, money supply. Finally, state your opinion of whether Janet Yellen is correct.

Answer 1

Answer:

Yes, Janet Yellen is correct to keep interest rates at amazingly low levels at the Federal Reserve Board.

Explanation:

The federal reserve board was established to help stabilize the financial system and one of the ways to achieve stability is through monetary policy.

The following are the benefits of keeping interest rates low at the federal reserve board

1. Keeping interest rates helps recapitalize the banking system by encouraging deposits.
2. Low interest rates increases money supply available for spending thereby stimulating the economic activity in the country positively
3. low interest rates increases employment opportunities by making good credits available to businesses.
4. Business competitiveness helps stabilize the economy and guard against cost push inflation.